Category: Yahoo

Introduction

The Six Design Drivers (SDDs) identified in Milestone 1 can support Yahoo’s business goals. The firm should “use powerful strategies such as effective managerial practice, coordination, specialization, accountability, and motivation” (Carlson, 2015, p. 73). These practices will support their present and future goals. The firm has several capabilities that make it a leading industrial player (Palepu, Srinivasan, Lane, & Cornell, 2011). For instance, Yahoo is a leading global brand with many customers on every continent. The firm also improves its services and products in order to emerge successfully. The decision to hire competent programmers will support the company’s future performance. This essay describes the best high-level design options that will ensure the firm achieves its potentials.

Analysis of the Four Design Options

Many companies have achieved their potentials because of the concept of departmentalization. Yahoo Incorporation should consider the four design options of departmentalization in order to succeed. The first design option is a function. Many firms use various activities depending on the targeted organizational functions. Employees with similar skills are usually brought together in order to work as teams. The second design option is the product. This strategy ensures every product is characterized by specific activities. Such activities will result in better performance (Kesler & Kates, 2010). Every product will have a unique line of management.

The other design option focuses on the customer’s needs. Many organizations group their functions or activities based on the targeted customers. For example, a company might have different employees serving specific customers. Every department will focus on specific consumers who share similar problems. The concept of geographic departmentalization will ensure every activity is completed depending on the targeted territories (Kesler & Kates, 2010). This design will ensure the firm serves more customers in different geographic locations.

Two High-Level Design Options: Benefits and Risks of Each

The nature of an organization determines the best design options that can produce the best outcomes. Yahoo Incorporation should begin by focusing on product departmentalization. This design option is appropriate because Yahoo has a wide range of products. The company will ensure its workers focus on different products. Every product will be monitored by a single manager. The manager will hire the right specialists and programmers in order to improve the product. The senior manager should “ensure his or her product is successful” (Kesler & Kates, 2010, p. 56). This approach will ensure the firm achieves its potentials. However, most of Yahoo’s products are inseparable. This fact means that they have similar customers. Any attempt to group them into different departments can affect the company’s performance.

The second one is geographic departmentalization. Yahoo Incorporation can benefit the most from this strategy. To begin with, Yahoo has many customers in every part of the world. The firm’s organizational structure should focus on the needs of different clients in every geographical location. The approach will make the firm more innovative and competitive. The firm will also analyze the competitiveness of different firms in every geographical location (Carlson, 2015). However, the strategy can make the firm less competitive in regions dominated by firms such as Google. The firm will also be unable to focus on the socio-cultural needs of its customers.

Organizational Archetype and How it Affects Structure Decisions

Yahoo Incorporation’s organizational archetype dictates its structure decisions. To begin with, Yahoo is a multinational firm because it serves many continents. The firm also “offers several products but in the same industry” (Palepu et al., 2011, p. 12). The organization offers internet-based applications such as “adverts, emails, search engines, messenger, and news” (Palepu et al., 2011, p. 17). Such products have similar customers. This fact means that the firm cannot segment its customers. Yahoo has not widened its presence in different continents such as Africa. This fact explains why the above geographical departmentalization might not produce the best outcomes. The firm’s products are also designed by the same programmers. Such products have also similar customers. This fact explains why the firm cannot use all these four design options. This situation also affects Yahoo’s structure decisions. That being the case, a new grouping option will be relevant for Yahoo Incorporation.

Best Grouping Option for Yahoo

A powerful strategy is required in order to make Yahoo successful. To begin with, the targeted Design Drivers will ensure the firm achieves its goals. Managers should identify the best organizational functions in order to produce competitive products. The above two high-level design options will make it easier for Yahoo Incorporation to emerge successfully. The firm will ensure every manager focuses on a specific product. The Six Design Drivers will also work effectively for every product. The firm should “also segment different markets depending on factors such as competition, attractiveness, and consumer expectations” (Carlson, 2015, p. 87). A powerful motivational strategy will ensure every employee focuses on the company’s goals. This strategy will ensure the firm produces quality products.

Conclusion

Yahoo Incorporation should begin by using the above two high-level design options. The firm should also use the best Design Drivers in order to emerge successfully. New research and development (R&D) practices will result in superior products. Some practices such as effective management and accountability will make Yahoo Inc. successful. The use of modern technologies will ensure Yahoo increases its competitiveness. Every worker should be motivated in order to achieve the best outcomes.

Reference List

Carlson, N. (2015). Marissa Mayer and the Fight to Save Yahoo. New York, NY: Twelve Press.

Kesler, G., & Kates, A. (2010). Leading Organization Design: How to Make Organization Design Decisions to Drive the Results You Want. New York, NY: Jossey-Bass.

Palepu, K., Srinivasan, S., Lane, D., & Cornell, I. (2011). Strategy and Governance at Yahoo! Incorporation. Harvard Business School, 1(1), 1-33.

Introduction

Yahoo Incorporation should use appropriate strategies to become a leading player in its industry. The design options (Product and Geographic) recommended in Module 2 can support Yahoo’s business objectives. The firm should also use the best Six Sigma Drivers to improve the competitiveness of its products (Carlson, 2015). The managers should also focus on the best leadership practices. The power of research and development (R&D) will ensure the firm competes successfully in the global market. The company should also use the four governance levers to formulate a powerful business strategy. This essay offers the best value-adding roles that can make Yahoo successful.

Yahoo’s Operating Model: Design Rights

It is agreeable that Yahoo Incorporation uses a powerful model to achieve its goals. The firm supports a hybrid operating model. The company has different departments and units. However, such units embrace common approaches to achieve the best outcomes. Most of the systems in every unit are also common. Similar talents are expected in every unit. Yahoo uses the best corporate practices to add value. Yahoo’s corporate functions have been effective in promoting the best practices (Kesler & Kates, 2010). This operating model is currently supporting the company’s goals.

Yahoo Inc. operates different units and departments. Every department has a qualified manager. Such managers ensure every activity is completed successfully. However, the “power of corporate oversight of knowledge, capital, and talent makes it easier for the company to achieve its goals” (Carlson, 2015, p. 92). The firm has a CEO whose role is to promote the best practices. This operating model creates a simple matrix. This simple hierarchy makes it easier for Yahoo to achieve its objectives. The firm has established “different departments such as Finance, Product Development, Advertising, and Marketing in order to achieve the targeted outcomes” (Carlson, 2015, p. 52). Every department has a leader who makes the best decisions. The leader also promotes best practices. The duty of the Chief Executive Officer (CEO) is to ensure every function produces the best outcomes.

Application of the Four Governance Levers

Yahoo Incorporation uses the four governance levers to support its business strategy. Diagnostic systems are used to track the performance of different departments. This strategy makes it easier for Yahoo to achieve its goals. Different managers at the firm use this lever to channel the right resources. This practice supports the firm’s goals. Yahoo has also been using different belief systems to empower its employees. The system seeks “to empower different managers, salespeople, and clerical personnel” (Carlson, 2015, p. 72). Every employee is encouraged to focus on the best goals. The practice also “produces the best employee-relationships in the organization” (Abdullah & Mehmood, 2013, p. 1609).

The company also uses boundary systems to promote the right behaviors. Such behaviors improve the level of responsibility. Every employee avoids unnecessary behaviors thus resulting in innovation. Interactive levers or networks are critical towards producing the best teams. Yahoo has established formal systems to produce the best products (Carlson, 2015). The managers also monitor every decision-making process to support the firm’s strategy. Yahoo manages its resources using these four levers. This practice has made it easier for Yahoo to produce a powerful business strategy.

Recommendations for Function Support

Yahoo Incorporation should identify the best value-adding roles to become centralized. The first important “value-adding role is called the operating core (OC)” (Abdullah & Mehmood, 2013, p. 1611). Yahoo should promote the best business practices and products that will satisfy the expectations of every customer. Function support (FS) should empower different marketers. Such marketers support the needs of every targeted customer. Proper support is essential because it ensures every activity is executed in a professional manner (Kesler & Kates, 2010). This practice will ensure the firm acquires new competitive advantages.

The concept of techno-structure is critical for Yahoo Incorporation. The managers at Yahoo should create new functions and strategies to produce quality products. Every programmer should produce quality services and products depending on the needs of the targeted customers. A proper managerial structure will ensure every function focuses on the best outcomes. These recommendations “will ensure every firm becomes center-led” (Abdullah & Mehmood, 2013, p. 1612). The approach will ensure the company produces quality products that can compete in the market. The firm should also combine these strategies with the above governance levers. The main goal is to ensure Yahoo Incorporation becomes a leading competitor in its industry.

Conclusion

Yahoo Incorporation has a powerful operating model. This hybrid model ensures every department is aware of the targeted organizational goals. The firm should create a balance between the operating model and the four governance levers. This practice will ensure every employee is aware of the targeted business strategy. Yahoo should embrace new practices and value-adding roles to support its business strategy (Kesler & Kates, 2010). The use of modern R&D practices and technologies will result in competitive products. Yahoo Incorporation should be aware of the increasing level of competition in the industry. This practice is necessary because companies such as Google are producing quality products. These practices will eventually make Yahoo successful.

Reference List

Abdullah, H., & Mehmood, K. (2013). Corporate Parent Value Addiction and Challenges. Middle-East Journal of Scientific Research, 15(11), 1606-1617.

Carlson, N. (2015). Marissa Mayer and the Fight to Save Yahoo. New York, NY: Twelve Press.

Kesler, G., & Kates, A. (2010). Leading Organization Design: How to Make Organization Design Decisions to Drive the Results You Want. New York, NY: Jossey-Bass.

Introduction

The influence of an organization’s workforce on its general performance makes it necessary for executives to ensure the selection and strategic positioning of its employees. The competitive nature of the environment wherein organizations operate requires a continuous change in the strategic positioning of the organization’s workforce. Influential and successful companies usually consider the internal and external factors influencing their organization when developing workforce planning strategies. To understand the concept of strategic workforce development, it is important to consider the workforce strategy applied by an established organization. This paper focuses on analyzing the workforce planning strategy implemented by Yahoo! The paper is divided into three parts. The first part of the paper presents a GAP analysis of Yahoo!’s human resource strategy; the second section of the paper presents a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis about Yahoo!’s workforce management; and the third part analyzes the influence of the two examinations on Yahoo!’s current and potential employee performance efficiency.

Company History

Yahoo! Inc. was established in 1994 by two Jerry Yang and David Filo, both Stanford Ph.D. students. The company has grown to become the biggest internet-based network and integrated services provider and has more than 800 million users globally (Friesner, 2014). Yahoo! currently has a presence in over twenty regions and markets globally and is most popular for its search engine and numerous other services, such as electronic mail, finance, social media, advertising, etc.

The company was established as a personal online directory by two Ph.D. students of Stanford University. The founders became aware of the prospect of generating funds from the website by permitting firms to market their services on their online catalog. In a short while, Yahoo became popular enough to catch the attention of a major investment organization, Sequoia capital. Sequoia offered the much-required capital to the company, and Tim Koogle, an executive of Motorola was employed as the CEO of the company. His outstanding management abilities and foresight ensured Yahoo!’s success. The company’s share price grew from $5 per share to nearly $244 a share by 1999 (Burnham, 2014). Nonetheless, inspired by the exceptional leadership that Yahoo! enjoyed during its early days, the company over the past years appears to be losing market share to its arch-rival Google Inc.

Google has been performing better than Yahoo in the past many years now, gaining shares in the market share and expanding its consumer base manifolds. In the last years, however, Yahoo! Inc. has made considerable changes in its goals, strategic approach and to its internal, external environment and approach to boost its delivery and recover lost advantage to its major rival, Google.

GAP Analysis

A gap analysis is an analytic comparison of the current position or performance of an organization, with the potential performance of the organization. Gap analysis seeks to identify the potential of a company that is yet to achieve based on the resources currently in the company’s possession.

Yahoo! is yet to record any financial growth in the last number of years. Marisa Mayer became the Chief Executive Officer of Yahoo! in July 2012. In terms of profitability, Yahoo! has not performed effectively. In the last four quarters, Yahoo! has not recorded any notable improvement in its income and has reported a reduction in its operating profitability owing to an increase in non-recurring expenditure (Yahoo Income Statement, 2013). Nevertheless, since Marissa Mayer became the new CEO of the company in 2012, she has launched a new strategic approach of expanding the company through mergers and acquisitions and by taking other significant decisions. The strategic move by Yahoo to employ two executive staff of rival companies is an indication of Yahoo!’s understanding of the significance of the competition posed by other companies in the online business industry. This move has resulted in a more proactive senior management team. Recently, Yahoo!’s CEO, Marissa Mayer traded part of Yahoo!’s stake in Chinese online marketplace, Alibaba, and used parts of the proceeds to purchase BrightRoll, an online-based video advertising company. She explains that the deal will lead to a dramatic rejuvenation of Yahoo!’s video advertising market (Yahoo! seals first major deal since Alibaba windfall, 2014).

It is obvious that Yahoo! is better positioned in its internal environment than its external environment. To improve its external positioning, Yahoo! needs to improve its brand and assets to increase its market share and its general performance. In 2012, Yahoo! decided to call all remote employees back to the office. This resulted in the company shedding 14% of its workforce. This strategy was the beginning of Yahoo!’s refocusing of its activities towards its core competencies, which include solution innovation and expansion.

While Yahoo! currently understands its position in the online business market, the company needs to consider other characteristic features of the company before rolling out new strategies. A SWOT analysis is an effective tool used to present a picture of the organization both externally and internally.

SWOT Analysis

A SWOT analysis is a review of the strengths, weaknesses, opportunities, and threats of an organization. For this report, the SWOT analysis is related to Yahoo!’s human resource management strategy.

Strengths

One of the major strengths of Yahoo! is that it serves as a highly profitable online advertising venture. Yahoo! concentrates on affiliate marketing for major marketing accounts, similar to Google’s Adsense system. This serves as a major source of income for the company. Currently, more than 350 million people and businesses use Yahoo!’s services and systems. This positions Yahoo! as a formidable company in the industry. Yahoo! has been reported as the most known website globally (Burnham, 2014). Yahoo! initially employed numerous employees and allowed them to work remotely from their homes, which meant that employees had to manage their work habits and general work behavior. The results were disadvantageous for the company as indicated by its ban on remote employment. Considering the number and diversity of Yahoo! users, the company needs to ensure a unified working policy that allows users to get the same user experience and service opportunities. Yahoo! also has a considerably high level of employee diversity, which serves as an advantage to the company. Considering that Yahoo!’s users come from various parts of the world, the company must have a culturally diverse workforce. The high rate of employee diversity in Yahoo! enables the company to attend to users that cut across different demographic areas.

Opportunities

Yahoo! has tremendous opportunities in the global market. Google, Microsoft, and Yahoo!, are currently buying over various small business ventures within and around Asia. China’s citizens are more than 1.2 billion and other countries, such as India, provide remarkable expansion opportunities. The creation of Yahoo!’s Directory has prospects for new business and revenue generation sources. Over 30% of the companies in Europe, Japan, and North America are SMEs, which are all prospective directory marketers. Mobile tools provide another prospect for Yahoo!. Currently, the internet is accessed using computers however in the future the internet will be accessed majorly using mobile phones, TVs, PDAs, portable music recorders, etc. The future mobile gadgets will require solutions and services and Yahoo! will be efficiently positioned to offer numerous solutions. Yahoo!’s initial employment approach gives it an edge in utilizing these opportunities since it allowed employees to work from any part of the world, which increased the company’s sources of information.

Threats

The major threat faced by Yahoo!, and all other internet-based companies, is the high rate of competition in the industry. Enormous profitability in the industry draws financiers, developers, and businesspersons. The dotcom buzz is still present and is presently more concentrated on profitability. Each service offered by Yahoo! has a competing product offered by either of its rivals, which include Google, Bing, AOL, etc. Global, culture particular rivals may affect Yahoo! eventually, except strategic partnerships are created. China and India have both developed dedicated search engines. It is, therefore, possible that users will prefer to use search engines that are based on their cultural and geographical dispositions instead of using Yahoo!, which is an American based organization. For Yahoo! to remain a global brand, it must offer different competitive benefits. The threats Yahoo! is faced with will be better appreciated if the situation is compared with the global auto market.

Weaknesses

One of the major weaknesses faced by Yahoo! is that it finds it difficult to achieve differentiation. Yahoo! provides services and solutions that are usually provided by other competing organizations. For example, Yahoo!’s search engine solution is also provided by Google and MSN; Yahoo!’s free e-mail profiles are also provided by other competitors, such as Gmail (by Google) Hotmail (by MSN), AOL, etc.; Yahoo!’s news facility also faces high competition from BBC and CNN; Yahoo!’s shopping system faces high competition from eBay, Amazon (by Google), etc.

Internet-based advertising has offered a new source of revenue for Yahoo!, Google, MSN, and other online companies. Income from advertising actives has formed a major source of revenue for such organizations. Nevertheless, advancement in technology results in new unexpected advertising media, which make the future bleak for the various income sources. This weakness is not only experienced by Yahoo! but is also experienced by its rivals. One other source of income that has been important for Yahoo! is the partnership it develops with telecommunication companies. For instance, some telecommunication companies offer internet services that have dedicated fees for Yahoo! solutions. Any disadvantage faced by these telecommunication companies will lead to an automatic disadvantage in Yahoo!’s income stream.

Summary and Conclusion

The purpose of the paper was to present a workforce planning analysis applied by Yahoo! Inc. A workforce planning analysis reviews the strategy applies by a company to ensure that its human resources are well-positioned to respond to internal and external characteristics experienced by the company. Yahoo! Inc. is a major player in an industry that is characterized by a high level of competition. All the companies in the online business industry are exposed to significant competition and must promptly identify and respond to competition to remain competitive and profitable. A company will remain competitive in a highly competitive industry by employing a proactive workforce. Yahoo! understands the importance of a formidable workforce for effective competition. Yahoo!’s utilizes its workforce planning strategy to ensure that it attracts employees that know of competing organizations. Yahoo!’s choice of CEO and CFO in 2012 is evidence of the company’s understanding of the need to understand and respond to the strategies of the competitors in the industry it operates. Yahoo! hired two management staff from the executive team of its major rival, Google. This workforce planning strategy was developed as a direct response to Yahoo!’s declining sales and competitive position due to the high rate of competition it faced, especially from Google.

Even though it took a long time for the positive effects of this strategy to be felt, it appears as though the strategy is yielding positive results. Yahoo! recently purchased BrightRoll for $640 million. BrightRoll is reported to yield $100 million annually. This deal is expected to boost Yahoo!’s strength in the area of online video advertisement and increase its ability to compete with Google’s YouTube. While it is early to state the feasibility of Yahoo!’s workforce planning strategy, it is safe to conclude that the prospects of the strategy are positive. However, it is important that Yahoo! does not only apply a workforce planning strategy that reacts to the issues identified in the industry. Yahoo! should also seek a workforce planning strategy that is proactive and is developed based on anticipated events.

References

Burnham, K. (2014). Yahoo trumps google as most-visited website. Web.

Friesner, T. (2014). SWOT Analysis Yahoo! Web.

Yahoo Income Statement. (2013). Web.

Yahoo! seals first major deal since Alibaba windfall. (2014). Web.

In the presented study, the issues of the right approach towards the negotiation, the importance of the team, and the ability to find new ways of resolving a problem after a failure are addressed by the former president of the Yahoo Company.

At the beginning of the 2000s, US companies began to penetrate the Chinese market. However, there were few deals, and Chinese rivals were more successful in the market. Moreover, the Internet as an industry was not as developed as in the USA. The company experienced difficulties in gaining revenue, and the management style of the entrepreneur was also perceived negatively by the company’s staff.

The alternatives were either to continue working with the aggressive manager, to hire new staff, to close the deal, or to find a new company to collaborate with. The Yahoo Company decided that a new company would possibly resolve the problem of difficult market positions. Nevertheless, it was a risk.

In this case, the success of the deal was supported by the specifics of the negotiation between the Yahoo Company and new managers. As the former president of the company notices, the founder of the Alibaba Company impressed them with his management philosophy. It is often the case that companies with different visions and approaches cannot effectively operate and build a business, even if it is potentially profitable. In this case, the alignment between the Yahoo and the Alibaba administrations led to a favorable deal. Due to good relationships with the founder, the company’s negotiations with Alibaba were facilitated, and the joint venture was created.

The ability to recognize mistakes and learn from them was one of the key approaches that helped the company succeed in the market, argues the author.

The importance of negotiation and cultural agents is also underlined by the author of the article. As Sue Decker explains, the company had to agree to abandon their previous “control” approach in favor of the Chinese colleagues who insisted on it. As it turned out, such an approach was standard in the Chinese Internet and media industry. Here, the company could have refused, but eventually, the deal would end in the same way as their previous one did – with little to no success. Therefore, the company chose another approach to the existing norms in business in China and only profited from it. Any alternative to this decision would have resulted in a complete failure, just as it was with 3721. Although the company agreed to give up control over many procedures in 3721, it was not enough for the local team to compete with Chinese rivals. Therefore, in the new deal with Alibaba, the company had no other option but to give up all control they had over the local operations. What is more, employee issues were also resolved by the partner, who had no previous connection to the company. Nevertheless, the deal brought revenues and success because the company’s leadership teams aligned in the approach towards business. Chinese leaders were open to the suggestions and U.S. methods of business management. Due to this ability to negotiate, the two companies were able to work on the issues that emerged in the market and become serious competitors to other Chinese companies.

Thus, the understanding of local complexities and features of the market can greatly improve an outsider’s business, but only if a foreign company is willing to accept the rules.

Introduction

Yahoo! Inc. has placed itself in the top spot among Internet portals, by attracting approximately 232 million visitors each month worldwide. It not only offers a directory and search engine, but also features a collection of communications, commerce, and content services with over 25 international sites in 13 languages.

Yahoo! produces much of its revenue from banner advertising and sponsorship ads, while also obtaining fees through subscription and business services, such as SBC Yahoo! DSL and Dial, Yahoo! Personals, Small Business Services, Yahoo! Mail, and Yahoo! Enterprise Solutions. Moreover, many customers paying fees rose to 8.4 million, from 4.9 million the previous year, reflecting enlargement in these services.

According to the expert analysis Yahoo! is the number one Internet brand internationally and reaches the main audience universally. Furthermore, the service more than 232 million people each month universal. Yahoo! is global Internet communications, commerce, and Media Company that helps Internet users navigate the World Wide Web. Yahoo! has the main worldwide audience. No doubt, they also have the most breadth of wireless products and services of any web supplier. Yahoo! offers a broad array of communications, commerce, and content services that lead consumers to make them their homes on the Internet. (Chang, 2002)

Background

If we analyze then we come to know that Yahoo! was founded by David Filo and Jerry Yang in 1994. Filo and Yang in progress they’re directed to keep a list of their attention on the Internet. As their list grows they would break them into subcategories. This is the basic core concept behind Yahoo. As word spread about their site more and more people started using their site. In the fall of 1994, the site celebrated its first million-hit day.

In March of 1995 Yahoo! was integrated. In April 1995 they received an investment from Sequoia Capital. Realizing that their company could produce rapidly they looked for a management team. Tim Koogle was employed as chief decision-making officer and Jeffrey Mallett was hired as leader operating officer. In April 1996, Yahoo! opened a highly-winning IPO. In May of 1999 Yahoo! was reincorporated.

Throughout the past decade, the Internet has grown necessary for approximately all people. Some of Yahoo’s closest competitors are Google, Excite, MSN, Earthlink, and American Online. Due to Yahoo being so wide and offering a broad range of Internet and technology products, Yahoo also has to vie not directly with companies such as Microsoft. When it comes to Internet providers and search and marketplace, Yahoo ranks in the middle of the top.

Revenues for the fiscal year broken 12/31/2006 totaled $3.57 billion as Net profits totaled $839.6 million. Google’s revenues for the fiscal year ended 12/31/2006 totaled 3.19 billion; comparable to Yahoo’s, but the Net income was nowhere near Yahoo’s at $399.1 million. Earthlink, Inc, another Internet service provider, shows considerably fewer revenues and net income for the fiscal year ended 12/31/2006. Microsoft, a much larger company shows revenues of $38.47 billion and net income of $10.00 billion for the fiscal year ended 12/31/2006. Overall, Yahoo is competing with a variety of players in the computer service industry.

Porter’s Analysis of the Industry

It is crucial for a strategic business manager to obtain a clear comprehension of the industry that Yahoo functions in to get an edge over competitors. There are a large number of competitors presenting similar services like Yahoo. Due to the feasibility of similar information, there exists very little diversity between rivals. Because of this, competition is usually primarily based on brand name and brand equity. Michael Porter developed a scheme explaining the five forces that influence how an industry operates.

Barriers to Entry/Threats of New Entrants

The threat of new entrants restricts the whole profit possible in the industry since new entrants bring new abilities and they seek market split, pushing down margins. But in the real world, a variety of industries effort to guard their firms’ high-profit height and restrict additional rivals from entering the market. These barriers to entry exist in the market to prevent potential rivals from entering in.

In the computer services industry, in which Yahoo functions, is extremely hard for new rivals to enter the market. One of the reasons for the low threat of novel entrants is since of the high economies of level and knowledge curves in this business. Yahoo was able to capture these economies of scale by creating geographical-specific sites and expanding its operations. New entrants would find it difficult to capture the economies of scale. Furthermore, the fact that Yahoo offers free services eliminates the idea of switching costs. In addition, rivals would have a hard time competing with Yahoo’s successful brand identity and brand equity.

Bargaining Power of Suppliers

Suppliers can apply their bargaining power in an industry by threatening to either increase prices or reduce the quality of products or services. Yahoo’s suppliers have somewhat low bargaining power. There are plenty of suppliers in the market so the influence of such suppliers is not as notable. Besides, there are numerous sources that would be willing to provide information to Yahoo.

Bargaining Power of Customers

Buyers are able to compete in the industry by driving down prices and demanding higher quality or better services. Individual end-users have high bargaining power because of the number of various portals providing the same service as Yahoo provides. On top of that, it doesn’t cost them to switch over to another information provider. This makes it necessary for Yahoo to exemplify their services to their customers in order that they are satisfied.

The Threat of Substitute Products

When substitutes are available in the market, profitability in an industry is limited.

The threat of substitute products is high for Yahoo in the computer services industry. The pricing for Yahoo’s services and its competitors provides very little difference. Advertisers and end-users find it very easy to switch service providers because of the vast availability.

Industry Supply and Demand

The Internet is considered to be the fastest-growing communication medium in the history of the world. It continues to grow at an incredibly fast rate increasing the demand for service providers such as Yahoo. This number may increase to 2007, according to IDC.

With the prices of computers falling, more and more customers are now able to afford personal computers. Whether users are utilizing Internet resources for online shopping, education, business, email, etc, the world has definitely seen a dramatic increase in the number of users.

Competition

Yahoo!’s most significant competitors are Time Warner and Microsoft. Time Warner is an integrated media and communications company engaged in online services. It has a large customer base through AOL. Microsoft is the largest software company in the world and it provides numerous Internet products and services. They can sell software through online subscriptions. (Angel, 2002)

Weaknesses

Yahoo! needs to expend important interior engineering resources and obtain other technologies and companies to give or enhance their ability. They need to work on their piece of the international section. They need to get additional information concerning other countries. In international markets, they face considerable competition from Internet Service Providers that offer their possess navigational services.

Ratios

Ratios such as current ratio, debt to equity, ROE, and ROA indicate Yahoo is a financially strong company and consistent with its competitors. The current ratio indicates the company is liquid (more so than competitors) which should be valuable to shareholders by reducing risk and shows the company can take on more risk as well. Debt to equity is also a strong indication of its ability to handle more risk. (Turek, 2004) These ratios are also a reflection of the stability of the stock.

Profit Margins

Profit margins for Yahoo indicate consistency with its top competitors.

Growth

All the variables indicate that Yahoo’s growth exceeds competitors.

My investment of $ 1000 will return me profit with consistency. It is safe to invest in Yahoo.

Conclusion

Based on our research of stock price analysis, our recommendation is to BUY. Projected net sales continue to grow for Yahoo! and it has plenty of room for further steady growth. The higher income in addition reflects on improved operating margin.

The 52-week high was priced at $39.14, while the 52-week low was $25.26. The current price as of 5/2/07 was $43.29. The expected baseline price in our estimation was $46.32.

This recommendation is based on our assumption that the long-term growth rate for the firm will be 7% using the Corporate Valuation Model and 9% using the Discount Dividend Model.

References

Angel, Karen. Inside Yahoo! Reinvention and the Road Ahead. New York: Wiley, 2002.

Chang, Jennifer C. “In Search of Fair Housing in Cyberspace: The Implications of the Communications Decency Act for Fair Housing on the Internet.” Stanford Law Review 55.3 (2002): 969+.

Cowan, Douglas E. Cyberhenge: Modern Pagans on the Internet. New York: Rutledge, 2004.

Hogge, Becky. “Cyber Dissidents: A Long Blog to Freedom.” New Statesman. 2007: 18. Web.

Palser, Barb. “Is It Journalism? Yahoo! News Attracts a Large Audience but Does No Original Reporting.” American Journalism Review 2002: 62.

Turek, Melanie. “Instant Messaging: Time for IT to Pay Attention.” Business Communications Review. 2004: 50+.

Reuters, Yahoo! Inc YHOO.O (NASDAQ). Web.

The New York Times, Business; Yahoo Inc, 2007. Web.

Globalization and technology changes and influences on Yahoo Inc

Yahoo Inc. is a public software company whose major product is advertising space on its online properties and services. The significant technological changes influencing Yahoo Inc. include the development of Web 2.0 internet solutions that ushered the use of the Internet as an entertainment and social platform, besides promoting multimedia content. As a result, companies like Yahoo Inc. increased their product portfolio from offering search results to include advertisements. The technology also allowed Yahoo to come up with several online properties, such as a Yahoo finance portal that can capture users of various interests.

The development of smartphones and the growth of independent mobile operating systems that support apps have allowed Yahoo to launch dedicated apps for iOS and Android, thereby allowing it to deliver a rich experience for users of its various properties, such as Yahoo games, local news, and Yahoo answers. The company has also combined the capabilities of Web 2.0 and mobile apps to increase its range of digital content and enter into the traditional media company business of selling news and entertainment. However, the Yahoo business model remains advertiser-based (KPMG, 2011).

Growth in social media as a global phenomenon has also presented business opportunities for Yahoo to sell image-rich native ad spaces on its mobile apps to leverage the users’ need to share and self-actualize.

The recognition of internal laws on intellectual properties allows the company to operate in several countries without risking critical resource theft. The provisions have allowed Yahoo Inc. to expand its client base beyond the United States. On the other hand, Yahoo Inc. has had to remain very innovative as it grows because the increased flow of information across the globe has also made it easier for new competitors to achieve a global or regional presence. Currently, Yahoo Inc. has to consider the implications of business actions of its competitors from Asia, Europe, the Middle East, and Latin America that also offer search, communication, and other commercial services. The company was forced to develop localized portals for different markets to respond to the threat.

Application of industrial organization model and the resource-based model to determine how Yahoo Inc. could earn above-average returns

Industrial organization model

The external environment for Yahoo Inc. includes government policies and legal statutes. Its industrial environment includes users and advertisers, as well as content developers and device manufacturers. The competitive environment has other companies, such as Google, selling online advertising space. The industry is attractive because of the low cost of operations and the ease of using innovative options to grow revenue (Jurgenson, 2012).

Currently, Yahoo’s strategy is to dominate the Internet with its digital properties targeting users of different niches and relying on various technologies. The company has been running a talent recruitment program for nurturing employees so that they remain innovative. At the same time, the company can continue making acquisitions that bring in new employees and marketable solutions to advance its business (Yahoo Inc., 2014).

Consequently, the company has been using its resources to launch new products and improve the existing ones so that clients are satisfied and committed to relying on Yahoo Inc. for their business growth. Some acquisitions are not generating returns for the company, but they provide considerable resources for research and new product development that can become future earners for the enterprise (Hill, Jones, & Schilling, 2014). Current working product resources that yield revenues for the firm are Yahoo Gemini, Yahoo Ad Manager Plus, APT, BrightRoll, Flurry, and Yahoo Ad Exchange.

They run on a range of Yahoo Inc. properties like Flickr, Tumblr, Yahoo Finance, Yahoo Weather, Yahoo News, Yahoo Entertainment, and Yahoo Lifestyles. The strategy allows Yahoo to generate revenues from individual countries around the world and rely on third-party resellers of advertising space to allow Yahoo Inc. to tap into other digital properties that are popular in different markets (Yahoo Inc., 2014).

Resource-based view

Internal resources that help Yahoo Inc. have a competitive advantage are its people and its digital properties. The company sells advertising space, and it has relied on technology to ensure that its solutions for clients are unique and rewarding to their businesses. Currently, it has Yahoo advertising, which offers search, video, native, and display advertisement products. However, merely having these options for selling advertisement only gives the company the competitive threshold capabilities for its industry. The company has also been working on its human resources to become competitively sustainable. Yahoo Inc. maintains a recruitment program to get the best-skilled employees in product development and company management.

The resource is non-imitable and organizable. As a result, Yahoo Inc. has been creating innovative products that increase its presence in the online digital advertising solutions market. As the company becomes a major player, it faces stiff competition from new entrants who do not face severe entry barriers. Yahoo Inc. makes the acquisition of companies that offer strategic solutions to its current business to cement its position. The option to acquire other companies ensures that they are not available to provide solutions for rivals. Secondly, the companies bring talented staff and technological solutions that increase the business capacities of Yahoo Inc. In this regard, acquisitions have been a source of getting above-average returns. Based on the VRIO framework of the resource-based view theory, the acquisitions are valuable, rare, and organizable (Stringham, 2012). They can be imitated, but doing so depends on market conditions and would not match the exact capacities of Yahoo Inc.

Yahoo relies on sales professionals to bring business in its United States’ operations. Having salespersons is not a distinctive competitive advantage, but their organization, training, and compensation offer Yahoo an edge. New entrants and small companies cannot match their expenditure on the sales workforce; they require time to develop similar promotion capacities. On the other hand, Yahoo Inc. can continue increasing its digital properties and giving its sales professionals more options for finding new advertising clients or upselling existing customers. As a result, the company has a diversified revenue base that is sustained throughout the long-term. Based on this review, the sales professionals’ department at Yahoo is a resource meeting the VRIO thresholds, which will allow the company to earn above-average returns (Stringham, 2012).

Assessment of how the vision statement and mission statement of Yahoo Inc. influence its overall success

The vision statement of the company is to be part of users’ digital habits in various products and platforms as a powerful tool that allows the company to be engaged in the development of universal brand loyalty. Its mission statement is to enable advertisers to build their businesses through the Yahoo online properties business and its distribution networks that include affiliates.

The vision of the company enables Yahoo to maintain a focus on the provision of user solutions that are inspiring and entertaining. The company has to mirror the vision in its internal composition by seeking to recruit and retain talented individuals for various job positions and provide inspiration and develop entertaining products for users. The company then sells the target user base to advertisers. The mission statement is influencing the way Yahoo Inc. operates.

Evaluation of how each category of stakeholder influences the overall success of this corporation

Yahoo Inc. stakeholders are users of its digital properties, shareholders, advertisers on the digital properties, and content publishers acting as affiliates of various Yahoo Inc. advertising products. Employees and third party content producers are also stakeholders. Growth in the number of users increases the attractiveness of the Yahoo-advertising platform. Therefore, any action by users that leads to a decrease in the popularity of the company’s digital properties threatens the business. Users, as external stakeholders, can be organized and demand specific business practices from Yahoo Inc. They may also be represented by their respective governments that can enact laws or pass regulations that increase or decrease opportunities for Yahoo Inc. to do business.

Also, employees as internal stakeholders determine whether Yahoo can meet its objectives by working innovatively and optimally. The actions of the employees that can lead to an increase in the costs of doing business will affect the company’s options for earning above-average returns. Shareholders have the biggest power to influence executive decisions by the enterprise and in an organized form; they can compel the company to focus on the short-term or long-term goal in growth and profitability (O’Brien, 2015).

References

Hill, C., Jones, G., & Schilling, M. (2014). Strategic management theory: An integrated approach (11th ed.). Stamford, CT: Cengage Learning. Web.

Jurgenson, N. (2012). When atoms meet bits: Social media, the mobile web and argumented revolution. Full Internet, 4(1), 83-91. Web.

KPMG. (2011). Going social: How businesses are making the most of social media. Web.

O’Brien, M. (2015). Yahoo stakeholder turns up pressure on Marissa Mayer. San Jose Mercury News. Web.

Stringham, S. (2012). Strategic leadership and strategic management: Leading and managing change. Bloomington, IN: iUniverse. Web.

Yahoo Inc. (2014). Form 10-K: Yahoo Inc. Web.